Peru Sol Holds at Nine-Week Low on Central Bank Dollar Purchases

Peru’s sol held at a nine-week low as
the central bank continued buying dollars as part of its policy
to squelch a rally that pushed the local currency earlier this
year to the highest since 1996.

The sol was unchanged at 2.5775 per U.S. dollar at today’s
close in Lima, according to prices compiled by Bloomberg.

The central bank bought $80 million in the spot currency
market at an average 2.5772 soles per dollar, according to its
website. The monetary authority purchased $1.8 billion last
month and raised dollar reserve requirements after the sol
touched 2.5390 on Jan. 14, its strongest level in 16 years,
according to data from Peru’s financial regulator.

Today’s dollar purchases “offset local supply” as
companies bought soles to pay local taxes, said Gonzalo Navarro,
the head trader at the local unit of Banco Santander SA.

The yield on Peru’s benchmark 7.84 percent sol-denominated
bond due August 2020 rose two basis points, or 0.02 percentage
point, to 3.76 percent, according to prices compiled by
Bloomberg. The price declined 0.13 centimo to 126.35 centimos
per sol.